Loyalty programs are nothing new. My father –formerly a frequent business traveler– was enrolled in countless programs within the airline, hospitality, and car rental industries. I vividly remember this, because whenever we were at a check-in counter or a front desk, he’d produce his massive travel wallet, holding different currencies and loyalty cards from all over the region, and ask the same question: “How many points have I got?” And this was always followed by: “What can I get with them?” Thankfully, things have moved on since then. Customer loyalty in the current era is a rapidly changing space, with more and more companies building their own tech-driven programs, or leaning on an existing or open platform. But why? The motivating factor is undoubtedly the same for all businesses: customer retention. The pathway there, however, can be tricky to navigate.

Attracting new customers isn’t cheap– it’s widely said that bringing new customers onboard costs five times more than keeping an existing one. In its crudest form, if you reward customers, they will buy again… and hopefully again, and again. The majority of marketers and e-commerce managers value the philosophy of customer retention, but many of them still misunderstand how to drive and cultivate it.

According to a research by digital marketing firm Kitewheel, 73% of consumers said that loyalty programs are a way for brands to show appreciation for loyal customers. However, a staggering 66% of marketers see it as a way for consumers to show brand loyalty. This way of thinking shows a worrying lack of understanding. Customers owe you nothing, and they have nothing to prove. Don’t get me wrong: you cannot overstate the value of a happy customer singing from the rooftops, showing advocacy for your brand. But this can only happen when the brand in question has genuinely shown those customers how vital and essential they are to the business. It’s a two-way street.

So how can brands show how loyal they are to their customers with a dedicated program, and not the other way around? The good news is that it’s simple. Focus on empathy and communication. I truly believe in life that there is no greater act than showing understanding. In business, empathy allows brands to create that magic moment for a customer. For instance, imagine checking in for your flight, and the airline offers you a free upgrade. This recently happened to my brother, and he was genuinely delighted- the airline shared and understood a moment with him, which has definitely garnered loyalty on his side. He now would much prefer only flying with this company, even though their price may be above the market rate.

Going back to the two-way street, communication is an important factor in loyalty programs. It should allow customers to give feedback and voice their opinion, and as importantly, offer transparency. A successful program needs to remain connected to the customer service function and ideally it should integrate across all different channels. Empathy and communication can only be applied with correct data management– this is what enables authentic engagement. The more data you have, the more ability you have to segregate it into really useful buckets of information. This is what helps you really understand consumer behavior on an individual basis, adding the personal touch.

Let’s face it, none of us enjoy it when brands try and push us something they should know we really don’t want or need. It’s not enough today to build a program, lie back and simply expect it to guarantee customer retention. But if you have a system that understands all of these factors, backed by aggregated –and then segregated– data, you can offer your customer that magic moment. It’s pretty simple– after all, something that feels truly personal and authentic is far more likely to increase customer spending.